India holds back clearances for 52 oil, gas blocks

8/24/2012

India holds back clearances for 52 oil, gas blocks

BY RAKESH SHARMA

NEW DELHI--India is holding back clearances for more than a fifth of the exploratory blocks it has auctioned in various rounds since 1999 to domestic and overseas energy explorers due to defense, environmental and maritime boundary issues. The delay is hurting the nation's plans to expedite exploration of its oil and gas assets and ramp up local output to cut its import bill and may threaten investments by overseas explorers in the country's energy sector.

"Presently, 52 blocks awarded under various rounds of new exploration licensing policy bidding are pending clearance by different organizations such as the Ministry of Defence, Ministry of Environment and Forests, Ministry of External Affairs and state governments," Oil Minister Jaipal Reddy told lawmakers in a written reply in the lower house of Parliament.

Of the 52 blocks awaiting clearances, 22 are operated by ONGC, 15 by Reliance, five by BHP, three by Cairn Energy, two by Santos and one each by BG Group,BP and ENI. Under nine auction rounds, India has awarded 249 blocks. But so far, discoveries have been made in only 36 blocks.

Mr. Reddy said clearances for larger areas from which these blocks are carved out are always obtained from other ministries before offering them for bidding. But for the 52 blocks, the companies will have to seek additional approvals from the related ministries of defence, environment and foreign affairs to start or resume exploratory work.

The Indian and foreign companies have already invested $12.4 billion for exploration and development activities in these blocks, he said. India, which saw its crude-oil import bill jump 48% on year to $121.76 billion in the fiscal year ended March 31, is seeking to trim it by ramping up local output with the help of global oil and gas exploration companies and by acquiring assets overseas.

However, the government's control over pricing and marketing of its natural resources and lengthy approval processes for exploration blocks have made overseas investors jittery and lose interest in the country's energy sector. India's Mint newspaper last month reported that the oil ministry had warned the prime minister's office that non-clearance of blocks could lead to an exodus of foreign companies that were brought in with assurances of a conducive investment environment as well as litigation and claims of damages.